November 2008

November 28, 2008

Having cut £6.5 million a year from the budgets to promote London abroad in the fields of tourism, inward investment, filming and attraction of foreign students Boris Johnson's administration has now been hit over the head by events and forced to restore £750,000 of these cuts in the area of tourism. The administration, however, is now falsely claiming it is boosting spending to promote London's tourist industry when all it has done is restore part of the damaging cuts it had previously made!

A press release put out by the Mayor's Office last night states: 'The Mayor of London has announced an increase of nearly £750,000 to Visit London campaigns, aimed at stimulating visits to the capital in the build up to Christmas and into 2009.'

Any such increase in spending to promote abroad London is welcome for reasons that have been outlined several times in this blog. The problem is that the £750,000 'increase' follows a £1.5 million a year cut to Visit London's budget made earlier by the same Mayoral administration. So, therefore, far from boosting spending to promote London's tourism industry in fact the budget to promote London's tourism industry has been reduced by £750,000 this year - and the body for the integrated strategic promotion of London, London Unlimited, has been entirely abolished with a budget cut of £5 million a year. Meanwhile, the result of these damaging cuts has been the departure of Visit London's CEO James Bidwell - a highly respected figure in the tourism industry.

The reasons that led Boris Johnson's administration to the new partial, and unacknowledged, U-turn are evident, The press release notes: 'The Mayor made the announcement to an audience of tourism leaders at the Visit London Awards at the Royal Albert Hall and follows a meeting with industry figures this week.' In other words tourism industry leaders informed Boris Johnson that his cuts to Visit London were deeply damaging to London and he had better do something about it - particularly in an economic downturn. This follows the extremely unsubtle hint given by the Tourism Society, the organisation of tourism industry professionals, earlier this year when it decided to award its prestigious prize for services to the tourism industry to... Ken Livingstone.

But the damage done to London's tourism promotion by Boris Johnson's administration still hasn't been undone. In addition to the budget cuts Boris Johnson's administration humiliated Visit London, despite expert opinion in the GLA, by for months refusing even to meet its chief executive - this contemptuous attitude was undoubtedly a further reason for Bidwell's decision to depart.

James Bidwell was the second absolutely top rank of the marketing profession CEO Visit London had attracted. His predecessor, David Campbell, is now head of the O2 which, in addition to his earlier career successes, has become a roaring success as the most visited arena in the world. So far the head hunt for James Bidwell's successor goes on. But it will be extremely difficult to attract anyone of equal talent or standing to the two previous CEO's to an organisation whose budget was slashed, which was humiliated by the Mayor's Office, and whose strategic role, and great value, to London is clearly not understood by the Mayor's Office as shown by the various U turns on the issue. Meanwhile the entire staff of the body responsible for integrated promotion of London, London Unlimited, which set an example which cities such as New York have since followed, have been sacked. In short the damage done by Boris Johnson's administration to tourism and the promotion of London is far from having been undone.

This whole fiasco, however, has important lessons for those who want to reverse the damaging policies of Boris Johnson's administration. The tourism industry did not lie down and pretend to be dead when confronted with policies by the new administration that were deeply damaging to London. Nor did it rely purely on quiet 'insider' lobbying. It mounted a loud and vociferous campaign to reverse policies that were damaging to London and it has gained a first success.

The reason for this is that Boris Johnson's administration is best imagined as a sort of sack of potatoes with a voice. The strategic direction it would like to follow, 'small government', simply won't work because London is undergoing rapid population growth and requires huge investment both to get out of the current economic downturn and prepare itself for competition from other international business centres. Therefore the administration is directionless and not knowing where it is doing - as not merely many of those who interact with it, and innumerable GLA Group officers, who cannot get any sense of direction or even any decisions on many matters out of it, know every day.

The best thing therefore is to go up and hit it with a stick and the resulting cry of pain may get you some money. Try to reason with it quietly and its own lack of direction and incompetence will lead to no result. That is the lesson that others should draw from the fiasco of Boris Johnson's policies around tourism.

Note

For those who want further details the press release contains the following empty claims and revealing facts.

First, it disingenuously states: 'The additional public/private funding will take the total amount spent on promoting the capital at home and abroad to £3.25m over the next four months.' The trouble is that this is actually less, even after restoration of the £750,000, than would have been spent before Visit London's budget was cut by £1.5 million this year by the same Mayoral administration.

Second, it states that this £3.25 million promotion campaign will result in: 'an amount that is expected to deliver £70m in economic benefit to the city'. That is right. Studies show that tourism marketing campaigns result in about £20 of economic benefit to London for every £1 spent - which is why they are such good value for money. And why the cuts that were made were so damaging.

November 27, 2008

The polemic on delivering value for money versus wasting money started by my post today on the cuts in the tourism budget for London has continued on Dave Hill's Guardian London Blog. I posted earlier here my comment on this thread. This evoked a response by the associate editorof Autocar which can be read on Dave Hill's blog. This is my reply, which contrasts the investment in tourism promotion by Ken Livingstone when he was Mayor, which yielded real benefits for Londoners, with the extraordinary waste of money carried out by the present administration. It illustrates also the wider differences between the two administrations

'The intervention of the Associate editor of Autocar (Newsed1) gives an excellent opportunity to explain the difference between what is value for money, policies which were pursued by Ken Livingstone's administration, for example the budget spent on promoting tourism, and what is a waste of money – the ‘new Routemaster' promoted by Autocar, supported by the present administration, and which will waste over £100 million a year of Londoners money.

The budget for tourism and promoting London was excellent value for money because the money spent was exceeded by a huge amount by the money got back in spend by extra visitor numbers – as illustrated in my previous post. That high return translated into incomes and jobs for Londoners. That is, it was an investment for London – an example of the way Ken Livingstone's administration really delivered value for money and why the cuts to the budgets for the promotion of London are so short sighted and damaging.

The waste of money by Boris Johnson's administration has been quite extraordinary. First £50 million a year for the public transport system in London was given up by canceling Ken Livingstone's £25 a day CO2 congestion charge on gas guzzlers – the £50 million a year lost being good news for drivers of gas guzzler but bad news for everyone else. Then £22 million a year, at current exchange rates, was lost by canceling the cheap oil from Venezuela deal. Then, announced today, a minimum £14 million a year (even on the Evening Standards figures) has been lost for public transport by abandoning the Western Extension of the congestion charging zone. So, therefore, so far £86 million a year has been wasted by the present administration on public transport.

However this is exceeded by the more than £100 million a year that all independent studies show would be the cost of the ‘new Routemaster project promoted by Autocar, the Evening Standard, and the present administration.

As a result of these huge losses Londoners are paying far more for their public transport system than they need. And as a result of the cuts in the tourism promotion budget Londoners are going to have less income from visitors and therefore less jobs.

'Both the unnecessary waste of £million a year on transport, and the loss to Londoners of the cuts in the budget for tourism promotion, are examples of how not to run the economic policy of an administration and will be particularly damaging to London in a recession.'

Dave Hill has put a link to my post today on promoting London on his 'London Blog'' on the Guardian website. This led to comments by those defending cutting the marketing budgets for London which can be read in full there.

I reproduce here the reply I posted because it deals not only with tourism but with the confusion between 'cost cutting' and 'value for money', which are two quite different things, which are at the root of serious errors both by the present administration of London and by those who defend such policies.

'The arguments of CJCJC and domprague [commenters on Dave Hill's blog] show just what is wrong with those who support Boris Johnsons policies in this area and why they lose so much money for London. They don't understand the difference between ‘value for money, which is always a good thing, and ‘cost cutting – which may or may not be a sensible idea depending on what is its effect on value for money.

'The difference can be explained very easily with an analogy that is almost exact for the promotion of London. Suppose a travel agent abolishes their advertising budget. That is definitely ‘cost cutting. But it is terrible ‘value for money – because six months later they find out they have lost far more money than they saved because they no longer have any customers.

'The economics of the promotion of London abroad are clear. The grant from the GLA group to Visit London, the citys tourism agency was before the present administration cut it, slightly over £15 million a year. In 2006, the last year for which I had figures to hand, the increase in tourist spending in London was over £600 million. Certainly not all that increase was due to Visit Londons marketing , but as London was gaining market share in an industry where there is a natural tendency for every destination to lose market share, as each year there are more places to visit, some of it certainly was.

'Studies of the return on investment in tourist marketing campaigns for London show value for money of over 20 to 1 – that is for every £1 spent £20 is gained.

'Regarding inward investment, studies by the independent economics consultancy DTZ show that, because inward investment is concentrated in industries with far higher than average value added, every job created by a foreign company in London adds over £100,000 to Londons economy – which then goes into Londons shops, theatres, and therefore in creating other jobs as well.

'As for CJCJCs argument that ‘I think most holidaymakers around the world are perfectly well aware of which currencies are strong or weak at any particular time well that certainly shows that it was a mistake to create the advertising industry – heaven knows why companies pay such money for advertising campaigns. You might as well as say ‘well everyone knows the price and value at Tesco compared to Sainsburys so Tesco is making a mistake advertising. Better that Tesco should stop advertising. Try that and see what happens to Tescos sales.

'No, the point is that comparatively few people, and the world tourism market is beginning to be numbered in billions of people and inward investment flows in trillions of pounds, knows the relative attractions of London, or that it can be visited currently at lower prices than usual because of the decline in the pounds exchange rate, compared to other destinations that are engaged in heavy promotion because they understand how effective it is – such as New York, or India, or Paris.

'The present administration has cut £6.5 million a year out of the budget for the promotion of London – or almost a third. Yes, that is genuinely ‘cost cutting. But it is absolutely appalling value for money because the loss to Londons economy will be tens, very possibly hundreds of millions, of pounds.

'In response to Dave Hill – yes I openly state I am partisan. London built one of the finest marketing machines in the world which was deeply envied and admired by other cities. It has been seriously damaged, and in major part demolished, by the present administration - which will lose many tens of millions of pounds for London as many people in the business community are fully award.

'All arguments are, in reality, openly or implicitly partisan. The point is whether they are right or not. Those who have attempted to defend the cuts in the budgets for promoting London abroad have not produced a single argument that shows these cuts are anything other than extremely bad value for money indeed.'

Boris Johnson is speaking as Mayor at the Visit London awards this evening. The advance press release is full of warm words. But the reality of Boris Johnson's administration has been huge cuts, almost one third, in budgets to promote London abroad and the departure of the Chief Executive of Visit London. Therefore ignore the words - just focus on the budgets. The key issue this evening will be whether Boris Johnson will be forced to declare he is reversing his cuts to the budgets to promote London abroad

First the words in Mayor's Office press release: ''The Mayor is expected to reinforce the message that London remains a top destination for tourists and is better value than ever for overseas visitors, in a keynote speech at Thursday's Visit London Awards... The Mayor wants to ensure that people continue to come to the capital from across the UK and overseas, to help the city's economy through the downturn.'

The reality of this administration? London Unlimited, the strategic body responsible for integrated promotion of London has been entirely abolished, its staff dismissed, and its budget abolished - London Unlimited brought together Visit London (tourism), Think London (inward investment), Film London, London Higher (London's higher education sector) and other agencies. Simultaneously Visit London's budget has been cut. The Chief Executive of Visit London has departed.

These cuts amount to a reduction of £6.5 million in the slightly over £20 million a year budget for promoting London - or a reduction by one third plus the departure of a Chief Executive admired in the industry. These cuts would be wrong at the best of times. They are totally damaging to London at a time when it faces economic recession, when tourism is one of London's most important industries, and when the importance of inward investment from the large new emerging economies of India and China is even more important to London than ever. It is even more ridiculous when the fall in the exchange rate of the pound means London has just become a cheaper, and therefore more attractive, destination for tourists and inward investors into London - this message should be being hammered out through increased spending on promoting London abroad not through cuts in such expenditure. Instead one of the world's most admired and effective city marketing machines, which brought many many millions of pounds of benefit to London's economy in increased tourist numbers, has either been abolished or seriously weakened by Boris Johnson's administration

Boris Johnson's administration has been subject to so much criticism on this that he may just be forced to announce these cuts are being reversed at Visit London's awards this evening. Those attending, and London as a whole, may ignore the words. They should concentrate on one thing - whether he will announce that the damaging cuts he imposed on promoting London abroad will be reversed.

Hopefully he will announce the reversal of the cuts - if not there should be uproar as his is deeply damaging London on this issue during a recession. But even if the cuts are reversed it shows the problem with Boris Johnson's administration. Occasionally reality comes along and hits it so hard on the head that it is forced to reverse course from its own failure to understand the key issues facing London. But London does not need an administration that is dragged along kicking and screaming in the wake of events - least of all when it confronts the biggest financial crisis for eighty years. It needs an administration that foresees what the the big challenges that confront London are. On the promotion of London Boris Johnson's administration has shown it totally fails to understand the modern world.

November 18, 2008

Tony Travers has a piece in today's Evening Standard on London's economy, the international financial crisis, and the way London should respond to it.

This, among other things, deals with an issue this blog has discussed in detail - the damage done to London by Boris Johnson's cuts to the budgets and agencies to promote London. This blog's author has posted the following comment on Travers article on the Evening Standard's website:

'Tony Travers writes: "First, tourism is a sector with massive short- and long-term potential. The economies of China, India, Russia and beyond will generate vast numbers of new tourists in the years ahead. West End theatre is the best thing of its kind in the world and, along with the capital's unparalleled museums and heritage, a big draw for the world's growing middle class. London has some of the world's best art and architecture schools. In a less glossy near-future, Britain's cheap-and-cool fashion, music and talent will be a tremendous asset... Agencies such as Visit London, Think London, Film London and London Higher, which respectively promote tourism, inward-investment, film and universities, will need additional resources. Now is not the time to make "efficiency savings" in these bodies. Indeed, there may be a need for new ones, for example to promote the capital's health sector."Unfortunately slashing the budgets of these agencies which promote London is exactly what Boris Johnson has done. He has abolished entirely London Unlimited, the integrated agency for promoting London in other countries, and cut the budget for London's tourism agency Visit London.Boris Johnson should admit that these cuts were deeply damaging to London, publicly reverse these policies, and admit Ken Livingstone was right on them.It remains to be seen whether he will do so.'

November 12, 2008

Few things illustrate Boris Johnson's administration's failure to understand the modern world, and therefore its incompetence, more completely than the saga of London's offices set up to represent and promote the city in India and China - the world's most rapidly growing giant new economies. It is an issue thrown into particularly graphic light by the current world financial crisis.

During the Mayoral election campaign Boris Johnson, and Tory candidates, did everything possible to present it is as ridiculous for London to maintain offices to promote the cty abroad - Think London, the city's inward investment agency, which is funded by the London Development Agency, also has offices in the US.

Boris Johnson and Tory candidates frequently attempted to exploit the most backward looking sentiments regarding these - often making attacks on them the first point in their campaign literature.

Thus for example Richard Tracey, Tory candidate for Merton and Wandsworth, announced in his election leaflet to electors: 'Local Conservatives are campaigning to remove the extravagances such as Ken Livingstone's "foreign embassies".’ Matthew Laban, Tory candidate in Enfield and Haringey, in his address to constituents, attacked that ‘our money has been spent opening embassies in other countries.’

Boris Johnson himself took the same position. Taking the Nick Ferarri show on Wednesday 12th December 2007, Ferarri asked: ‘And would you continue bureaus in Venezuela, Delhi, Beijing and everywhere else? Yes or no.” Boris Johnson: "No."’

This pledge was strongly attacked by leaders of London’s businesses, who understood the importance of these decisive new markets overseas - for example at the Mayoral London business hustings on 26 March.

Boris Johnson, worrying about such business criticism, therefore scrapped his previous pledge to close the offices and announced to the Evening Standard the same day that he would ‘review’ them. Then on 14 April he announced in his business manifesto today that ‘we fully endorse the representation of London overseas’ (p13). In other words a complete U-turn.

That, however, as has already point out above, did not stop Tory candidates across London campaigning against London’s representative offices. There was, in short, a complete shambles.

And what is revealed by the present international financial crisis, of course? That the two economies in the world which will be most relatively strengthened by it, because they are continuing to grow most rapidly through the crisis, are China and India - the places where Boris Johnson pledged to close down London's representation. A truly brilliant move that would have been. And of course his administration would never have opened them in the first place.

It is said that the difference between a statesman and a politician is that a statesman leads the country and a politician follows it. Ken Livingstone will be remembered as a great Mayor of London because he led the city to face key challenges that confronted it at the beginning of the 21st century - just as, in a different way, he redefined politics in London by facing the different challenges it confronted twenty years previously when he was leader of the GLC. Boris Johnson's administration, as shown vividly by its opposition to London's offices abroad, and its use of the most ignorant sentiments to attack them, has no understanding of the the most important challenges that face London at the beginning of the 21st century.